In The News Today

Posted at 3:22 AM (CST) by & filed under In The News.

Jim Sinclair’s Commentary

When you consider the USA invented, manufactured and exported over the counter derivatives, a financial device that has thrown the entire world into a depression, it is hard to assume that other will take the first move in an economic war.

That being said, the Pentagon is getting ready for the incoming.

It might be said that the OTC DERIVATIVE INVENTION, MANUFACTURE AND EXPORTATION IS AN ECONOMIC WAR CRIME. It has killed more people in its own way that the two nukes that were used in the Second World War.

Pentagon preps for economic warfare
On Apr 10, 2009, at 4:46 PM,
By: Eamon Javers 
April 9, 2009 04:18 AM EST

The Pentagon sponsored a first-of-its-kind war game last month focused not on bullets and bombs — but on how hostile nations might seek to cripple the U.S. economy, a scenario made all the more real by the global financial crisis.

The two-day event near Ft. Meade, Maryland, had all the earmarks of a regular war game. Participants sat along a20V-shaped set of desks beneath an enormous wall of video monitors displaying economic data, according to the accounts of three participants.

“It felt a little bit like Dr. Strangelove,” one person who was at the previously undisclosed exercise told POLITICO.

But instead of military brass plotting America’s defense, it was hedge-fund managers, professors and executives from at least one investment bank, UBS – all invited by the Pentagon to play out global scenarios that could shift the balance of power between the world’s leading economies.

Their efforts were carefully observed and recorded by uniformed military officers and members of the U.S. intelligence community.



Jim Sinclair’s Commentary

Today’s comment on the recently reported improvement in consumer sentiment seems a bit misleading.

Nordstrom March same-store sales down 13.5%


Kohl’s same-store sales down 4.3%


Abercrombie & Fitch March same-store sales down 34%


Wal-Mart Sales Are Short of Retail Metrics Estimate (Update4)
By Chris Burritt

April 9 (Bloomberg) — Wal-Mart Stores Inc., the world’s largest retailer, reported comparable-store sales in March that rose less than some analysts estimated, pushing the shares down the most in three months in New York trading.

Revenue from U.S. stores open at least a year advanced 1.4 percent in the five weeks ended April 3, the Bentonville, Arkansas-based company said today in a statement. That missed the 3.2 percent average estimate compiled by Retail Metrics Inc., a Swampscott, Massachusetts-based consulting firm. In February, same-store sales gained 5.1 percent.

"They didn’t come close to beating the comp-stores expectations," Howard Davidowitz, chairman of New York-based retail consulting and investment banking firm Davidowitz & Associates Inc. in New York, said today in a telephone interview. "They’re not immune to this huge downturn in the economy."

The highest U.S. unemployment since 1983 forced consumers to restrain spending. Lower prices on groceries and household items and $4 prescriptions helped Wal-Mart lure more consumers, the retailer said. They spent less per transaction compared with the year-ago period, which included Easter purchases, it said. Easter is April 12 this year. In 2008, it was March 23.


Jim Sinclair’s Commentary

All is far from dandy out there.

If the equity market rally fails to give time for repair, it can be blamed DIRECTLY on the delay of 90 days before implementation of the uptick rule.

The Earnings Bomb Inside GE Capital (GE)
Henry Blodget|Apr. 9, 2009, 10:54 AM

GE (GE) gave a presentation a few weeks ago designed to calm investors’ fears that the company’s huge financial services division, GE Capital, is just another Bear Stearns with a friendly logo.  The presentation helped, and GE’s stock has recovered some of its horrific losses.  As of this morning, it’s back above $11 (down from $40+ 18 months ago).

Some investors, however, are not convinced.  The inimitable Steve Eisman of FrontPoint Partners, for example, who was immortalized last year in Michael Lewis’s article about the end of Wall Street, detailed his thoughts about GE at Jim Grant’s annual conference a few days ago.

An investor in attendance was kind enough to forward Steve’s slides, and we’ve excerpted some of them below.  Here’s his bottom line:

GE Capital is currently hiding $40-$45 billion of embedded losses in the GE Capital portfolio.  This $40-$45 billion of losses, if rinsed through the income statement all at once, would wipe the company out.  In fact, if GE weren’t able to fund itself with the "heroin injection" of the government’s commercial paper program, it would already be bankrupt.

So is GE toast?

No. Unlike banks, GE is not required to mark its assets to market, so Eisman thinks the company will just hobble along for years as the bad news gradually works its way through its income statement (the very definition of a zombie bank).  The losses will hammer GE’s earnings, though.  Especially as the performance of the industrial business deteriorates.


Jim Sinclair’s Commentary

This is a little part of a much larger plan: Chinese domination of world economies.

Yuan trade settlement to start in five Chinese cities

Five major trading cities have got the nod from the central government to use the yuan in overseas trade settlement – seen as one more step in China’s recent moves to expand the use of its currency globally.

Shanghai and four cities in the Pearl River Delta – Guangzhou, Shenzhen, Dongguan and Zhuhai – have been designated for the purpose, said a State Council meeting chaired by Premier Wen Jiabao yesterday. The Pearl River Delta boasts the country’s largest cluster of export-oriented manufacturing operations.

The move is aimed at reducing the risk from exchange rate fluctuations and giving impetus to declining overseas trade, according to a statement posted on the government website.

Analysts said the experimental use of the yuan in trade settlement also reflects policymakers’ rising concern over the shaky prospects of the US currency, of which China has large reserves from previous trade growth, and their willingness to gradually expand the yuan’s use globally.

"The trial is the latest move toward making the yuan an international currency," Huang Weiping, professor of economics at Renmin University of China, said. "The prospect of a weaker US dollar is making the transition more imperative for China."